This Paper analyses an overlapping generation model of public good provision under repeated voting. The public good is financed through age-dependent taxation that distorts human capital investment. Taxes redistribute income both across different skill groups and across generations. We contrast the political equilibria with the Ramsey allocation, and analyse the sources of inefficiency. The political equilibria can feature both under- and over-provision of public good, as well an inefficient life-cycle profile of taxes.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
4044.
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation H41 - Public Economics - - Publicly Provided Goods - - - Public Goods H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
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"The Survival of the Welfare State,"
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J. Ignacio Conde-Ruiz & Vincenzo Galasso, 2003.
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